MINISTRY OF LAW AND JUSTICE

(Legislative Department)
New Delhi, the 12th August, 1996/Shravana 21, 1918 (Saka)

The following Act of Parliament received the assent of the President on the 10th August, 1996, and is hereby published for general information :-

THE DEPOSITORIES ACT, 1996

No. 22 of 1996 [10th August, 1996]

An Act to provide for regulation of depositories in securities and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Forty-seventh Year of the Republic of India as follows :

CHAPTER I PRELIMINARY 1. (1) (2) (3) (1) This Act may be called the Depositories Act, 1996. It extends to the whole of India. It shall be deemed to have come into force on the 20th day of September, 1995. In this Act, unless the context otherwise requires (a) beneficial owner means a person whose name is recorded as such with a depository; (b) Board means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992; (c) bye-laws means bye-laws made by a depository under section 26; (d) Company Law Board means the Board of Company Law Administration constituted under section 10E of the Companies Act, 1956; (e) depository means a company formed and registered under the Companies Act, 1956 and which has been granted a certificate of registration under sun-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992; (f) Issuer means any person making an issue of securities; (g) participant means a person registered as such under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992;
Short Title Extent and Commencement Definitions.

2.

15 of 1992

1 of 1956

1 of 1956 15 of 1992

15 of 1992

(2)

h) prescribed means prescribed by rules made under this Act; i) record includes the records maintained in the form of books or stored in a computer or in such other form as may be determined by regulations; j) registered owner means a depository whose name is entered as such in the register of the issuer; k) regulations means the regulations made by the Board; l) security means such security as may be specified by the Board; m) service means any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository. Words and expressions used herein and not defined but defined in the Companies Act, 1956 or the Securities Contracts (Regulation) Act, 1956 or the Securities and Exchange Board of India Act, 1992, shall have the meanings respectively assigned to then in those Acts. CHAPTER II CERTIFICATE OF COMMENCEMENT OF BUSINESS

1 of 1956 42 of 1956 15 of 1992

Certificate of commence ment of business by depositories

3.

(1) (2) (3)

No depository shall act as a depository unless it obtains a certificate of commencement of business from the Board. A certificate granted under sub-section (1) shall be in such form as may be specified by the regulations. The Board shall not grant a certificate under sub-section (1) unless it is satisfied that the depository has adequate systems and safeguards to prevent manipulation of records and transactions : Provided that no certificate shall be refused under this section unless the depository concerned has been given a reasonable opportunity of being heard.

CHAPTER III RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS AND BENEFICIAL
OWNERS
Agreement between depository and participant. Services of depository.

4.

(1) (2)

A depository shall enter into an agreement with one or more participants as its agent. Every agreement under sub-section (I) shall be in such form as may be specified by the bye-laws. Any person, through a participant, may enter into an agreement, in such form as may be specified by the bye-laws, with any depository for availing its services. Any person who has entered into an agreement under section
2

5.

Surrender of certificate of

6.

(1)

security.

(2)

(3)

Registration of transfer of securities with depository.

7.

(1)

(2)

8.

(1)

(2)

(1) (2)

1 of 1956.

10.

(1)

(2)

(3)

1 of 1956

11.

12.

(1)

5 shall surrender the certificate of security, for which he seeks to avail the services of a depository, to the issuer in such manner as may be specified by the regulations. The issuer, on receipt of certificate of security under subsection (1), shall cancel the certificate of security and substitute in its records the name of the depository as a registered owner in respect of that security and inform the depository accordingly. A depository shall, on receipt of information under subsection (2), enter the name of the person referred to subsection (1) in its records, as the beneficial owner. Every depository shall, on receipt of intimation from a participant, register the transfer of security in the name of the transferee. If a beneficial owner or a transferee of any security seeks to have custody of such security, the depository shall inform the issuer accordingly. Every person subscribing to securities offered by an issuer shall have the option either to receive the security certificates or hold securities with a depository. Where a person opts to hold a security with a depository, the issuer shall intimate such depository the details of allotment of the security, and on receipt of such information the depository shall enter in its records the name of the allottee as the beneficial owner of that security. All securities held by a depository shall be dematerialised and shall be in a fungible form. Nothing contained in sections 153, 153A, 153B, 187B, 187C and 372 of the Companies Act, 1956 shall apply to the securities held by a depository on behalf of the beneficial owners. Notwithstanding anything contained in any other law for the time being in force, a depository shall be deemed to be the registered owner for the purposes of effecting transfer of ownership of security on behalf of a beneficial owner. Save as otherwise provided in sub-section (1), the depository as a registered owner shall not have any voting rights or any other rights in respect of securities held by it. The beneficial owner shall be entitled to all the rights and benefits and be subjected to all the liabilities in respect of his securities held by a depository. Every depository shall maintain a register and an index of beneficial owners in the manner provided in section 150, 151 and 152 of the Companies Act, 1956. Subject to such regulations and bye-laws, as may be made in
3

Options to receive security certificate or hold securities with depository.

Securities in depositories to be in fungible form.

Rights of depositories and beneficial owner.

Register beneficial owner.

of

Pledge or hypothecation of

(2)

(3) 13. (1)

(2)

14.

(1)

(2)

(3)

15.

16.

(1)

(2)

Rights and obligations of depositories, etc.

17.

(1)

(2)

this behalf, a beneficial owner may with the previous approval of the depository create a pledge or hypothecation in respect of a security owned by him through a depository. Every beneficial owner shall give intimation of such pledge or hypothecation to the depository and such depository shall thereupon make entries in its records accordingly. Any entry in the records of a depository under sub-section (2) shall be evidence of a pledge or hypothecation. Every depository shall furnish to the issuer information about the transfer of securities in the name of beneficial owners at such intervals and in such manner as may be specified by the bye-laws. every issuer shall make available to the depository copies of the relevant records in respect of securities held by such depository. If a beneficial owner seeks to opt out of a depository in respect of any security he shall inform the depository accordingly. The depository shall on receipt of intimation under subsection (1) make appropriate entries in its records and shall inform the issuer. Every issuer shall, within thirty days of the receipt of intimation from the depository and on fulfillment of such conditions and on payment of such fees may be specified by the regulations, issue the certificate of securities to the beneficial owner or the transferee, as the case may be. The Bankers Books Evidence Act, 1891 shall apply in relation to a depository as if it were a bank as defined inn section 2 of that Act. Without prejudice to the provisions of any other law for the time being in force, any loss caused to the beneficial owner due to the negligence of the depository or the participant, the depository shall indemnify such beneficial owner, Where the loss due to the negligence of the participant under sub-section (1) is indemnified by the depository, the depository shall have the right to recover the same from such participant. Subject to the provisions of this Act, the rights and obligations of the depositories, participants and the issuers whose securities are dealt with by a depository shall be specified by the regulations. The eligibility criteria for admission of securities into the depository shall be specified by the regulations. CHAPTER IV

securities held in a depository.

Furnishing of information and records by depository and issuer.

Option to opt out in respect of any security.

Act 18 of 1891 to apply to depositories. Depositories to indemnify loss in certain cases.

ENQUIRY AND INSPECTION

Power of Board to call for information and enquiry

18.

(1)

The Board, on being satisfied that it is necessary in the public interest or in the interest of investors so to do, may, by order in writing (a) call upon any issuer, depository, participant or beneficial owner to furnish in writing such information relating to the securities held in a depository as it may require; or (b) authorise any person to make an enquiry or inspection in relation to the affairs of the issuer, beneficial owner, depository or participant, who shall submit a report of such enquiry or inspection to it within such period as may be specified in the order. Every director, manager, partner, secretary, officer or employee of the depository or issuer or the participant or beneficial owner shall on demand produce before the person making the enquiry or inspection all information or such records and other documents in his custody having a bearing on the subject matter of such enquiry or inspection. Save as provided in this Act, if after making or causing to be made an enquiry or inspection, the Board is satisfied that it is necessary(i) in the interest of investors, or orderly development of securities market; or (ii) to prevent the affairs of any depository or participant being conducted in the manner detrimental to the interests of investors or securities market. It may issue such directions(a) to any depository or participant or any person associated with the securities market; or (b) to any issuer. as may be appropriate in the interest of investors or the securities market.

(2)

Power of Board to give directions in certain cases.

19.

CHAPTER V PENALTY
Offences.

20.

Whoever contravenes or attempts to contravene or abets the contravention of the provisions of this Act or any regulations or bye-laws made thereunder shall be punishable with

Offences by companies.

21.

(1)

(2)

imprisonment for a term which may extend to five years, or with fine, or with both. Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other office shall also be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Explanation - For the purposes of this section, (a) company means any body corporate and includes a firm or other association of individuals; and (b) director, in relation to a firm, means a partner in the firm. CHAPTER VI MISCELLANEOUS

22.

(1)

(2)

23.

(1)

(2)

No court shall take cognizance of any offence punishable under this Act or any regulations or bye-laws made thereunder, save on a complaint made by the Board. No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under this Act. Any person aggrieved by an order of the Board made under this Act, or the regulations made thereunder may prefer an appeal to the central Government within such time as may be prescribed. No appeal shall be admitted if it is preferred after the expiry of the period prescribed therefor : Provided that an appeal may be admitted after the
6

Cognizance of offences by courts.

Appeals.

(3)

(4)

24.

(1)

(2)

25.
15 of 1992

(1)

(2)

expiry of the period prescribed therefor if the appellant satisfies the Central Government that he had sufficient cause for not preferring the appeal within the prescribed period. Every appeal made under this section shall be made in such form and shall be accompanied by a copy of the order appealed against and by such fees as may be prescribed. The procedure for disposing of an appeal shall be such as may be prescribed : Provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard. The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act. In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :(a) the time within which an appeal may be preferred under sub-section (1) of section 23; (b) the form in which an appeal may be preferred under subsection (3) of section 23 and the fees payable in respect of such appeal; (c) the procedure for disposing of an appeal under subsection (4) of section 23. Without prejudice to the provisions contained in section 30 of the Securities and Exchange Board of India Act, 1992, the Board may, by notification in the Official Gazette, make regulations consistent with the provisions of this Act and the rules made thereunder to carry out the purposes of this Act. In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for (a) the form in which record is to be maintained under clause (i) of sub-section (1) of section 2; (b) the form in which the certificate of commencement of business shall be issued under sub-section (2) of section 3; (c) the manner in which the certificate of security shall be surrender under sub-section (1) of section 6; (d) the manner of creating a pledge or hypothecation in respect of security owned by a beneficial owner under sub-section (1) of section 12; (e) the conditions and the fees payable with respect to the issue of certificate of securities under sub-section (3) of section (14); (f) the rights and obligations of the depositories, participants and the issuers under sub-section (1) of section 17;
7

Power of Central Government to make rules.

Power of Board to make regulations.

Power of depositories to make byelaws.

26

(1)

(2)

(3)

(g) the eligibility criteria for admission of securities into the depository under sub-section (2) of section 17. A depository shall, with the previous approval of the Board, make bye-laws consistent with the provisions of this Act and the regulations. In particular, and without prejudice to the generality of the foregoing power, such bye-laws shall provide for (a) the eligibility criteria for admission and removal of securities in the depository; (b) the conditions subject to which the securities shall be dealt with; (c) the eligibility criteria for admission of any person as a participant; (d) the manner and procedure for dematerialisation of securities; (e) the procedure for transactions within the depository; (f) the manner in which securities shall be dealt with or withdrawn from a depository; (g) the procedure for ensuring safeguards to protect the interests of participants and beneficial owner; (h) the conditions of admission into and withdrawal from a participant by a beneficial owner; (i) the procedure for conveying information to the participants and beneficial owners on dividend declaration, shareholder meetings and other matters of interest to the beneficial owners; (j) the manner of distribution of dividends, interest and monetary benefits received from the company among beneficial owners; (k) the manner of creating pledge or hypothecation in respect of securities held with a depository; (l) inter se rights and obligations among the depository, issuer, participants and beneficial owners; (m) the manner and the periodicity of furnishing information to the Board, issuer and other persons; (n) the procedure for resolving disputes involving depository, issuer company or a beneficial owner; (o) the procedure for proceeding against the participant committing breach of the regulations and provisions for suspension and expulsion of participants from the depository and cancellation of agreements entered with the depository. (p) the internal control standards including procedure for auditing, reviewing and monitoring. Where the Board considers it expedient so to do, it may, by
8

(4)

Rules and regulations to be laid before Parliament.

27.

28.

order in writing, direct a depository to make any bye-laws or to amend or revoke any bye-laws already made within such period as it may specify in this behalf. If the depository fails or neglects to comply with such order within the specified period, the Board may make the bye-laws or amend or revoke the bye-laws made either in the form specified in the order or with such modifications thereof as the Board thinks fit. Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. The provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force relating to the holding and transfer of securities. If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the difficulty: Provided that no order shall be made under this section after the expiry of a period of two years from the commencement of this Act. Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament. The enactments specified in the Schedule to this Act shall be amended in the manner provided therein. The Depositories (Third) Ordinance, 1996 is hereby repeated. Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under the corresponding provisions of the Act.
_____________________

Application of other laws not barred.

29.

(1)

Removal of difficulties.

(2) 30.
Ord. 28 of 1996.

31.

(1) (2)

Amendments to certain enactments. Repeal and saving.

THE SCHEDULE
9

(See section 30)

AMENDMENTS TO CERTAIN ENACTMENTS PART I AMENDMENT TO THE INDIAN STAMP ACT, 1899
(2 OF 1899)

AMENDMENT After section 8, the following section shall be inserted, namely :8A. Notwithstanding anything contained in this Act(a) an issuer, by the issue of securities to one or more depositories shall, in respect of such issue, be chargeable with duty on the total amount of security issued by it and such securities need not be stamped; (b) where an issuer issues certificate of security under subsection (3) of section 14 of the Depositories Act, 1996, on such certificate duty shall be payable as is payable on the issue of duplicate certificate under this Act; (c) transfer of registered ownership of shares from a person to a depository or from a depository to a beneficial owner shall not be liable to any stamp duty; (d) transfer of beneficial ownership of shares, such shares being shares of a company dealt with by a depository shall not be liable to duty under article 62 of Schedule 1 of this Act. Explanation - For the purposes of this section, the expressions beneficial owner, depository and issuer, shall have the meanings respectively assigned to them in clauses (a), (e) and (f) of sub-section 1 of section 2 of the Depositories Act, 1996. PART II AMENDMENTS TO THE COMPANIES ACT, 1956
(1 OF 1956) AMENDMENTS Securities not liable to stamp duty.

1.
15 of 1992

2.
Interpretation

In section 2, after clause (45A), the following clause shall be inserted, namely :(45B) Securities and Exchange Board of India means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992. After section 2, the following section shall be inserted, namely :2A. Words and expressions used and not defined in this Act
10

of certain words and expressions.

3.

4.

5.

6. 7.

8.

9.
Rectification of register on transfer

but defined in the Depositories Act, 1996 shall have the same meanings respectively assigned to them in that Act. In section 41, after sub-section (2), the following sub-section shall be inserted, namely :(3) Every person holding equity share capital of company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company. in section 49 in sub-section (5), after clause (b), the following clause shall be inserted, namely :(c) from holding investments in the name of a depository when such investment are in the form of securities held by the company as a beneficial owner. In section 51, the following provision shall be inserted, namely :Provided that where the securities are held in a depository, the records of the beneficial ownership may be served by such depository on the company by means of electronic mode or by delivery of floppies or discs. Section 83 shall be omitted. In section 108, after sub-section (2), the following subsection shall be inserted, namely : (3) Nothing contained in this section shall apply to transfer of security effected by the transferor and the transferee both of whom are entered as beneficial owners in the records of a depository. In section 111, after sub-section (13), the following subsection shall be inserted, namely : (14) In this section company means a private company and includes a private company which had become a public company by virtue of section 43A of this Act. After section 111, the following section shall be inserted, namely :111A. (1) In this section, unless the context otherwise requires, company means a company other than a company referred to in sub-section (14) of section 111 of this Act. (2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be freely transferable. (3) The Company Law Board may, on an application made by a depository, company, participant or investor or the Securities and Exchange Board of India within two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or the intimation of

11

10.

11. 12.

13.

transmission was delivered to the company, as the case may be, after such enquiry as it thinks fit, direct any company or depository to rectify register or records if the transfer of the shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992 or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985. (4) The Company Law Board while acting under sub-section (3), may at its discretion make such interim order as to suspend the voting rights before making or completing such enquiry. (5) The provisions of this section shall not restrict the right of a holder of shares or debentures, to transfer such shares or debentures and any person acquiring such shares or debentures shall be entitled to voting rights unless the voting rights have been suspended by an order of the Company Law Board. (6) Notwithstanding anything contained in this section, any further transfer, during the pendency of the application with the Company Law Board, of shares or debentures shall entitle the transferee to voting rights unless the voting rights in respect of such transferee have also been suspended. (7) The provisions of sub-section (5), (7), (9), (10) and (12) of section 111 shall, so far as may be, apply to the proceedings before the Company Law Board under this section as they apply to the proceedings under that section. In section 113, after sub-section (3), the following subsection shall be inserted, namely : (4) Notwithstanding anything contained in sub-section (1), where the securities are dealt with in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities. In section 150, in sub-section (1), in clause (b), the words distinguishing each share by its number shall be omitted. In section 152, in sub-section (1), in clause (b), the words distinguishing each debenture by its number shall be omitted. After section 152, the following section shall be inserted, namely :152A. The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996, shall be deemed to be an index of

15 of 1992. 1 of 1986.

Register and index of beneficial owners.

12

14.

members and register and index of debenture holders, as the case may be, for the purposes of this Act. In Schedule II, in Part II, in clause C, after sub-clause (9), the following sub-clause shall be inserted, namely :9A. The details of opinion to subscribe for securities to be dealt with in a depository.

PART III AMENDMENTS TO THE SECURITIES CONTRACTS (REGULATION) ACT, 1956

(42 OF 1956) AMENDMENTS

1. (i)

2.

Ins section 2, for clause (i), the following clause shall be substituted, namely :spot delivery contract means a contract which provides for(a) actual delivery of securities and the payment of a price therefor either on the same day as the date of the contract or on the next day, the actual periods taken for the dispatch of the securities or the remittance of money therefor through the post being excluded from the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality; (b) transfer of the securities by the depository from the account of a beneficial owner to the account of another beneficial owner when such securities are dealt with by a depository; Section 22 A shall be omitted.

PART IV AMENDMENT TO THE INCOME-TAX ACT, 1961 (43 OF 1961) AMENDMENT In section 45, after sub-section (2), the following sub-section shall be inserted namely :(2A) Where any person has had at any time during previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by the depository or participant of such beneficial interest in respect of securities shall be chargeable to income-tax as the income of the beneficial owner of the previous year in which such transfer took place and shall not be regarded as income of the depository who is deemed to be the registered owner of securities by virtue of sub-section (1) of section 10 of the Depositories Act, 1996, and for the purposes of -

13

(i) section 48; and (ii) proviso to clause (42A) of section 2, the cost of acquisition and the period of holding of any securities shall be determined on the basis of the first-in-firstout method. Explanation - For the purposes of this sub-section, the expressions beneficial owner, depository and security shall have the meanings respectively assigned to them in clause (a), (e) and (l) of sub-section (l) of section 2 of the Depositories Act, 1996. PART V AMENDMENT TO THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 (45 OF 1988) AMENDMENT In section 3, for sub-section (2), the following sub-section shall be substituted, namely :(2) Nothing in sub-section (1) shall apply to (a) the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter; (b) the securities held by a (i) depository as a registered owner under sub-section (1) of section 10 of the Depositories Act, 1996; (ii) participant as an agent of a depository. Explanation - The expressions depository and participant shall have the meanings respectively assigned to them in clauses (e) and (g) of sub-section (1) of section 2 of the Depositories Act, 1996. PART VI AMENDMENTS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (15 OF 1992) AMENDMENTS 1. In section2, in sub-section (2), for the words, brackets and figures the Securities Contracts (Regulation) Act, 1956, the words, brackets and figures the Securities Contracts (Regulation) Act, 1956 or the Depositories Act, 1996 shall be substituted. 2. In section 11, in sub-section (2), in clause (ba), for the words depositories, custodians, the words depositories,

42 of 1956.

14

3.

4.

participants, custodians shall be substituted. In section 12, in sub-section (1A), for the words depository, custodian, at both the places where they occur, the words depository, participant, custodian shall be substituted. In section 16, in sub-section (1), for the words this Act, the words and figures this Act or the Depositories Act, 1996 shall be substituted.

K. L. MOHANPURIA Secy. to the Government of India

15

MINISTRY OF LAW AND JUSTICE (Legislative Department)

New Delhi, the 15th January, 1997/Pausa 25, 1918 (Saka)

THE DEPOSITORIES RELATED LAWS (AMENDMENT) ORDINANCE, 1997

No. 5 OF 1997

Promulgated by the President in the Forty-seventh Year of the Republic of India.

An Ordinance further to amend the Indian Stamp Act, 1899, the State Bank of India Act, 1955, the Companies Act, 1956, the State Bank of India (Subsidiary Banks) Act, 1959 the Industrial Development Bank of India Act, 1964, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 and the Depositories Act, 1996. WHEREAS Parliament is not in session and the President if satisfied that circumstances, exit which render it necessary for him to take immediate action: Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance: CHAPTER 1
PRELIMINARY

1. (1) This Ordinance may be called the Depositories Related Law (Amendment ) Ordinance. 1997. (2) It shall come into force at once.

Short title and commencement

16

CHAPTER II AMENDMENT TO THE INDIAN STAMP ACT, 1899

Amendment of section 8A

2. In section 8A of the Indian Stamp Act, 1899, for clause (d), the 2 of 1899. following clauses shall be substituted, namely: (d) transfer of beneficial ownership of shares, such shares being shares of accompany formed and registered under the Companies Act, 1956 1 of 1956. or a body corporate established by a Central Act dealt with by a depository, shall not be liable to duty under article 62 of Schedule 1 of this Act. (e) transfer of beneficial ownership of units, such units being units of a mutual fund including units of the Unit Trust of India established under sub-section (l) of section 3 of the Unit Trust of India Act, 1963 dealt with 52 of 1963. by a depository, shall not be liable to duty under article 62 of Schedule I of this Act..
CHAPTER III AMENDMENTS TO THE STATE BANK OF INDIA ACT, 1955

Amendment of section 13.

3. In section 13 of the State Bank of India Act, 1955 (hereinafter in 23 of 1955. this Chapter referred to as the State Bank Act, in sub-section (l), the following proviso shall be inserted at the end, namely:Provided that nothing in this sub-section shall apply to the shares held with a depository..

Insertion of new section 13A. Register of beneficial owners. Amendment of section 15.

4. After section 13 of the State Bank Act, the following section shall be inserted, namely:-

13A. The register of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 shall be deemed to be a 22 of 1996. register of shareholders for the purposes of this Act.. 5. In section 15 of the State Bank Act, the following proviso and Explanation shall be inserted at the end, namely:Provided that nothing in this section shall apply to a depository in respect of shares held by it as a registered owner on behalf of the beneficial owners. Explanation.- For the purposes of section 13, section 13A and this section, the expressions beneficial owner, depository and registered owner shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (l) of section 2 of the Depositories Act, 1996.

17

CHAPTER IV

AMENDMENT TO THE STATE BANK OF INDIA (SUBSIDIARY BANKS)ACT, 1959

Amendment of section 21.

6. In section of the State bank of India (Subsidiary Banks) Act, 1959 (hereinafter in this Chapter referred to as the Subsidiary Banks Act) 38 of 1959. the following Proviso shall be inserted at the end, namely:Provided that nothing in this section shall apply to the shares held with a depository.. 7. After section 21 of the Subsidiary Banks Act, the following Insertion of sections shall be inserted, namely:new section
21A.

22 of 1996.

21A. The register of beneficial owners maintained by a depository Register of under section11 of the Depositories Act, 1996 shall be deemed to be a beneficial owners. register of shareholders for the purposes of this Act.. 8. In section 22 of the Subsidiary banks Act, the following proviso Amendment of and Explanation shall be inserted at the end , namely:section 22. Provided that nothing in this section shall apply to a depository in respect of shares held by it as a registered owner on behalf of the beneficial owners. Explanation-For the purposes of section 21, section 21A, and this section, the expressions beneficial owner, depository and registered owner shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (l) of section 2 of the Depositories Act, 1996.
CHAPTER V

AMENDMENTS TO THE COMPANIES ACT, 1956

1 of 1956.

9. After section 82 of the Companies Act, 1956 (hereinafter in this Insertion of Chapter referred to as the Companies Act), the following section shall be new section 83. inserted, namely: 83. Each share in a company having a share capital shall be Numbering of distinguished by its appropriate number. shares. Provided that nothing in this section shall apply to the shares held with a depository.. 10. In section 111A the Companies Act,a) in sub-section (2), the following proviso shall be inserted, namely;18 Amendment of section 111A.

Provided that if a company without sufficient cause refuses to register transfer of shares within two months from the date on which the instrument of transfer or the intimation of transfer, as the case may be, is delivered to the company, the transferee may appeal to the Company law Board and it shall direct such company to register the transfer of shares.. (b) for sub-section (3), the following sub-section shall be substituted, namely:(3). The Company Law Board may, on a application made by a depository, company, participant or investor or the Securities Exchange Board of India, if the transfer of shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992, or regulations made thereunder or the Sick Industrial Companies (Special Provisions)Act, 1985, or any other law for the time being in force, within two months form the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or the intimation of the transmission was delivered to the company, as the case may be, after such inquiry as it thinks fit, direct any depository or company to rectify its register or records.. 11. In section 150 of the Companies Act, in sub-section (l), in clause (b), after the words the shares held by each member, the words distinguishing each share by its number except where such shares are held with a depository shall be inserted. 12. In section 152 of the Companies Act, in sub-section (l), in clause (b), after the words the debentures held by each member, the words distinguishing each debenture by its number except where such debentures are held with a depository shall be inserted.
CHAPTER VI

15 of 1992. 1 of 1986.

Amendment of section 150.

Amendment of section 152.

AMENDMENTS TO THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964

Amendment of section 13B.

13. In section 13B of the Industrial Development Bank of India Act, 18 of 1964 1964 (hereinafter in this Chapter referred to as the Development Bank Act), in sub-section (l), the following proviso shall be inserted at the end, namely:Provided that nothing in this sub-section shall apply to the shares held with a depository..

Insertion of new section 13BA. Register of

14. After section 13B of the Development Bank Act, the following section shall be inserted, namely:-

13BA.

The register of beneficial owners maintained by a

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beneficial owners.

depository under section11 of the Depositories Act, 1996 shall be deemed to be a register of the shareholders for the purposes of this Act..

Amendment of section 13C.

15. In section 13C of the Development Bank Act, the following proviso and Explanation shall be inserted at the end, namely:Provided that nothing in this section shall apply to a depository in respect of the shares held by it as registered owner on behalf of a beneficial owner. Explanation-For the purposes of section 13B, section 13BA and this section, the expressions beneficial owner, depository and registered owner shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-sections (l) of section 2 of the Depositories Act, 1996.
CHAPTER VII

AMENDMENTS TO THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970
Amendment of section 3.

16. In section 3 of the Banking Companies (Acquisition and Transfer of Undertakings Act, 1970 (hereinafter in this Chapter referred to 5 of 1970. as the Bank Nationalisation Act), in sub-section (2F), the following proviso shall be inserted at the end, namely:Provided that nothing in this sub-section shall apply to the shares held with a depository..

Amendment of section 3A.

17. In section 3A of the Bank Nationalisation Act, the following proviso shall be inserted at the end , namely:Provided that nothing in this section shall apply to a depository in respect of shares held by it as registered owner on behalf of the beneficial owners.. 18. After section 3A of the Bank Nationalisation Act, the Insertion of following section shall be inserted, namely;new section
3B.

22 of 1996.

3B. The register of beneficial owner maintained by a depository Register of under section 11 of the Depositories Act, 1996. Shall be deemed to be a beneficial owners. register of shareholders for the purposes of this Act. Explanation-For the purposes of section 3, section 3A and this section, the expressions beneficial owner, depository and registered owner shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (l) of section 2 of the Depositories Act,
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1996..
CHAPTER VIII

AMENDMENTS TO THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1980
45 of 1980.

19. In section 3 of the Banking companies (Acquisition and Amendment of Transfer of Undertakings Act, 1980 (hereinafter in this chapter referred to section 3. as the Bank (Second) Nationalisation Act), after sub-section (2F), the following proviso shall be inserted at the end, namely:Provided that nothing in this sub-section shall apply to the shares held with a depository.. 20. In section 3A of the Bank (Second) Nationalisation Act, the following proviso shall be inserted at the end, namely:Amendment of Provided that nothing in this section shall apply to a depository in section 3A.. respect of shares held by it as a registered owner on behalf of the beneficial owners.. 21. After section 3A of the Bank (Second) Nationalisation Act, the Insertion of following section shall be inserted, namely:-

new section 3B.

22 of 1996.

3B. The register of beneficial owner maintained by a depository Register of under section 11 of the Depositories Act, 1996, shall be deemed to be a beneficial register of shareholders for the purposes of this Act. owners. Explanation.-For the purposes of section 3, section 3A and this section, the expressions beneficial owner, depository and registered owner shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (l) of section 2 of the Depositories Act, 1996..

CHAPTER IX

AMENDMENT TO THE DEPOSITORIES ACT, 1996

Amendment of section 9.

22. In section 9 of the Depositories Act, 1996, for sub-section (2) the following sub-section shall be substituted, namely:(2) Nothing contained in sections 153, 153A, 153B, 187C, and 372 of the Companies Act, shall apply to a depository in respect of securities held by it on behalf of the beneficial owners..
SHANKER DAYAL SHARMA President

22 of 1996.

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K. L. MOHANPURIA, Secy. to the Government of India.

Corrigenda

In the Finance (No.2) Act, 1996 (33 0f 1996) as published in the Gazette of India, Extraordinary, Part II, section 1, dated the 28th September 1996 (Issue No. 62),at page 1, in the title, for BILL, read ACT; at page 2, in the marginal heading against section 2 for tax, read Income-tax; at page 9,i) in line 20, for seven years, read five years, ii) in line 24, for Explanation read the Explanation, iii) in line 44 , for of thereof, read of transfer thereof; at page 10, in line 15, for of section, read of section; at page 14,(i) in line 21, for caluse, read clause, (ii) in line 23, for caluse read clause; at page 23, in line 23, for has not been part paid, read has been part paid; at page 32,i) in line 4, for wa of winning fro read way of wining from ii) omit (viii) on income by way of long-term capital gains; at page 33-,in paragraph A, for SI No. (3) and the entries relating thereto, read (3) where the total income exceeds Rs. Rs. 3,000plus 30 per cent of the 60,000 but does not exceed Rs. amount by which the total income 1,20,000 exceeds Rs. 60,000 in paragraph B, for Sl. No. (2) and the entries relating thereto, read (2) where the total income exceeds Rs. Rs. 1,000 plus 20 per cent of the 10, 000but does not exceed Rs. 20,000 amount by which the total income exceeds Rs. 10,000; at page 52, in line 31, for 10%, read 12%. at page 59 in line 8, for 6M.M.. read 6MM; at page 60, in line 29, for IRON STEEL, read IRON OR STEEL

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